Corporate & Commercial Fortnightly Update – 29 January 2014

January, 2014

In the Media

$145,000 for fake customer testimonials and country of origin claims

The Federal Court has ordered Euro Solar and Australian Solar Panel to pay $125,000 after it was admitted that YouTube videos advertising the companies contained fake customer testimonials and made false representations about the country of origin of solar panels. The director of both companies was also ordered to pay $20,000 for his role in publishing the videos (17 January 2014)

ACCC opposes Sonic Healthcare’s acquisition of Delta

The ACCC has indicated that it will oppose the proposed acquisition of the Delta Imaging Group by Sonic Healthcare Limited, stating that the deal will substantially lessen competition in the MRI and imaging markets in Maitland and Newcastle (17 January 2014)

ASIC extends relief for stapled securities

ASIC has extended class order relief that allows issuers of stapled securities to present consolidated or combined financial statements. The corporate regulator believes the amended class order (CO 13/1050) will clarify that consolidated or combined reporting by entities issuing stapled securities can continue under the new accounting standard on consolidation accounting (10 January 2014)

Franchise Council of Australia welcomes Franchising Code update in 2014

In today’s Australian Financial Review, Minister for Small Business, Bruce Billson said the Coalition would act early in 2014 to “maintain world-class regulatory support for a crucial part of the economy” (07 January 2014)

In practice and courts

Compliance guides for hotels and clubs – AUSTRAC

Two guides to help small gaming venues to meet their obligations under anti-money laundering legislation have been released by AUSTRAC. They provide examples of suspicious customer behaviour in gambling venues and outline a step-by-step process to: identify the risk in the venue, develop a plan for managing and maintaining the risk, establish good record keeping and reporting (07 January 2014)

A Consultation Paper seeking public comment in relation to a new draft Guidance Note on Dividends.. The Panel seeks comments from interested persons on the draft Guidance Note by Friday, 28 February 2014 (10 January 2014)

New ASIC Info Sheet — Disputing access to company info

Cases

470 St Kilda Road v Robinson [2013] FCA 1420

INSURANCE – Directors’ and Officers’ liability insurance contract – Whether exclusion clause for acts or omissions “in the rendering of, or actual or alleged failure to render any professional services to a third party” applied – Whether “project management” is a profession within the meaning of that word in the contract – Principles relating to construction of exclusion clauses in contracts of insurance – Meaning of “service”, “profession” and “professional service” – Whether cross-claimant’s conduct was done in the “rendering of a service” – Whether conduct done in the rendering of a “professional service” – Exclusion clause held not to apply – Separate Question answered “no”.

DIRECTORS’ DUTIES – whether directors breached their duties under Corporations Act 2001 (Cth) and at equity in causing their company to transfer shares it owned in two other companies to an individual who was the wife of one director and the daughter of the other – whether shares transferred at undervalue – whether breach of directors’ duties under the Corporations Act and at equity regardless of whether shares transferred at undervalue due to improper purpose breach and conflict breach – whether directors should be excused under s 1318 of the Corporations Act

EQUITY – knowing receipt – where statement of claim did not seek relief from knowing recipient – where primary judge awarded relief against knowing recipient as well as directors in breach from whom the statement of claim had sought relief – where knowing receipt complained at first instance that relief not pleaded against her – where primary judge did not give leave to plaintiffs to amend statement of claim and did not advert to the issue in awarding relief against knowing recipient

REMEDIES – at equity and under Corporations Act for breach of directors’ duties – where primary judge ordered enquiry as to damages or compensation to be awarded to company in relation to transfer of shares at undervalue – whether primary judge erred in not immediately assessing the equitable compensation to be paid by reference to the difference between the amount the company received as consideration for the shares and the findings made by her Honour as to the value of the shares as at the time of transfer – whether in calculating statutory compensation under s 1317H of the Corporations Act the shares were to be valued as at the time of transfer or as at time of assessment of compensation

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – RELATED PARTY TRANSACTIONS – where the appellant and the first respondent entered into a joint venture agreement to carry out property development – where the appellant and the first respondent each owned 50 per cent shares in Bluechip Development Corporation (Cairns) Pty Ltd, which they used as a joint venture vehicle to develop the land – where HSBC Banking Corporation Limited largely funded the development, and holds the first registered mortgage – where the appellant originally contributed $1.2 million, while the first respondent originally contributed $962,628 – where both provided additional funds to Bluechip some of which were secured by a second registered mortgage in favour of both the appellant and the first respondent – where the development was completed in May 2009

PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – OTHER MATTERS – where the respondents filed a notice of contention seeking to uphold the appeal on the basis that the appellant had ulterior purposes in pursuing the relief sought – where the respondents alleged special advantage would arise with respect to proceedings presently before the Federal Court of Australia – whether there is any substance to the ulterior motive contention

Yousef v Taxsmart Group Pty Ltd & Anor [2013] FCCA 2089

INDUSTRIAL LAW – Termination of employment in alleged contravention of a general protection – identifying the general protection – confusion caused by blending of employment agreement and ancillary franchise agreement – entering into franchise agreement pre-condition to entering into employment agreement – question of whether there was a fixed term of employment – question of whether termination was a “genuine redundancy” – onus of proof – small award made, but other claims dismissed.

CONSUMER LAW – Consumer guarantee provisions misleading or deceptive conduct – representations about the existence, exclusion or effect of a guarantee, right or remedy – admitted contraventions – agreed orders – whether orders appropriate – whether civil penalty within appropriate range – compliance program.Camavit Pty Ltd has a Harvey Norman franchise in Campbelltown, an outer western suburb of Sydney. It operates a retail outlet known as the Harvey Norman AV/IT Superstore Campbelltown from which it sells electronic goods. The regulator, the ACCC, seeks declaratory and injunctive relief, pecuniary penalties and other orders. This case is one of a series of cases in which the ACCC has successfully obtained orders of a similar kind against Harvey Norman franchisees